investment Highlights

• Total Funding:
  london-based startups garnered £2.69 billion in venture capital (VC) during the first quarter of 2025.
• Deal Volume:
  While the total value remained high, the number of individual deals decreased compared to the previous quarter.
• Key Sectors:
  Artificial intelligence (AI) and health/life sciences dominated the investment landscape.

KPMG’s Venture Pulse Report

A recent report by KPMG sheds light on the dynamics of London’s VC activity.

While deal count dropped from the previous quarter, the overall value of funding reached nearly 90 per cent of the £3bn raised in 2024’s last quarter.

KPMG’s Venture Pulse Report

The report indicates a continued strong investor interest in London’s innovation economy, notably in emerging technologies.

AI Takes Center Stage

Artificial intelligence is a major driver of London’s recent funding success.

• Isomorphic Labs:
  Secured £450 million to advance its AI drug design engine.
• Synthesia:
  Raised £138 million to develop AI video for enterprise communications.

Laura Cintro, chief executive of London and partners, emphasized London’s global leadership in AI investment.

In 2024,London proved its status as a global hub for AI,with record investment flowing into our companies. Frontier innovation,including AI and life sciences,will be at the heart of london’s 10-year growth plan.

Health and Life Sciences Thrive

Beyond AI, the health and life sciences sectors are also attracting substantial investment.

According to a report by Dealroom.co, these sectors accounted for nearly half of the UK’s megarounds in the first quarter, led by Isomorphic Labs and Verdiva Bio.

Simon bumfrey of HSBC Innovation Banking noted the thriving nature of UK health tech firms.

it’s exciting to see UK health tech firms thriving and attracting near-record investment, driven by AI innovations transforming the sector.

Investor Selectivity

Investors are increasingly selective, focusing on companies with solid fundamentals and a clear path to profitability.

Nicole Lowe, UK head of KPMG’s emerging giants practise, highlighted this trend.

In a financial climate that is currently fluctuating on a daily basis, investors are backing companies that offer the fastest path to profitability.

Lowe also cautioned that while IP-rich sectors may face short-term challenges,they remain crucial for long-term economic growth.

We should ensure we’re doing all we can to make the investments more attractive.

Fundraising Success in 2024

The strong performance in the first quarter of 2025 is partly attributed to prosperous fundraising by London-based VC firms in the preceding year.

These firms collectively raised $9.9 billion in 2024, nearly doubling the levels seen in 2023.

Catherine Lenson, chief operating officer of Phoenix Court, emphasized the potential of London’s tech companies.

With world-class talent, access to capital, and a supportive regulatory environment, a new generation of tech companies with the potential to become global champions are being born.

London’s Dominance

London continues to be a leading VC hub, surpassing other European tech centers.

The city accounted for the largest portion of the UK’s total funding in the first quarter, exceeding the combined totals of france, Germany, and Spain.

Hannah Seal of Index Ventures stressed the importance of addressing the talent bottleneck to maintain London’s competitive edge.

The record breaking investment in AI startups in 2024 highlights the strength of the UK’s talent pool. Tackling the talent bottleneck must now be a top priority if London is to maintain its global edge.

Looking Ahead

As London prepares for London Tech Week,the early results from 2025 indicate that the city remains a resilient and attractive